Regardless of whether you’re new to the investment game or not, we’re sure that you’ll have likely heard of how great master-planned communities are to invest in. But, does that mean that a master-planned community is a good idea to make an investment in?
Well, for the most part, we’re sure that you’ll agree with us when we say that master-planned communities are a significant upgrade to regular residential neighborhoods – and this is precisely what makes them so lucrative.
Even though they are relatively similar to standard residential neighborhoods, master-planned communities offer a variety of additional amenities and are most typically referred to as “small contained cities” as opposed to neighborhoods or towns.
Below, not only are we going to be helping you decide whether or not a master-planned community is worth investing in, but we are also going to be providing you with helpful information and examples to help you make the most well-informed decision possible.
What are master-planned communities?
Before we get any further, we first think that it would be a great idea to talk you through what a master-planned community actually is (as well as what they typically look like) so that you can gain a deeper understanding of whether or not they’re a good option for you to invest in. Let’s check them out further below:
In a nutshell, a master-planned community (which is sometimes referred to as its abbreviation MPC) is a type of residential community that is a significant step up from the typical residential neighborhoods that you’re likely the most familiar with.
So much so, that just like we have already briefly touched upon above, master-planned communities can be likened to a small city rather than a regular residential neighborhood that most of us live in.
Essentially, a master-planned community is a very large neighborhood that has all the amenities and resources needed to be entirely self-sufficient and independent of others.
These particular amenities include agricultural farms, medical facilities, malls, places of worship, restaurants, hospitality, and plenty more. So, with all of that being said, it should come as no surprise to hear that it is very common for master-planned communities to be upwards of 10,000 acres – which is a lot!
Alongside all of the essential amenities required to be self-sufficient and independent from other cities or neighborhoods, master-planned communities also tend to come with a variety of recreational facilities that members of the community will be able to attend, visit and enjoy on a daily basis.
To give you an example of what we mean by this, it is not uncommon to see a master-planned community with nature trails, golf courses, cinemas, and leisure centers, as well as a bustling nightlife scene, too. In addition to all of this, it is also not uncommon for master-planned communities to have their own schools (from kindergarten to high school and even sometimes college) as well as a variety of different shops and restaurants, as well as a dedicated business district.
Due to all of this above, it can be easy to see why many people might like to settle down in an MPC community. As they’re entirely self-sufficient, choosing to live in a master-planned community offers plenty of conveniences – as everything you might ever need will be right on your doorstep.
To follow, for the most part, you will likely find that most MPCs are, more often than not, located close to major cities – although this doesn’t always have to be the case. As for the reason behind creating them?
Well, the basic development desire for the creation of master-planned communities is to utilize a huge plot of land in order to sell it to multiple commercial and residential developers. This brings us to our next section!
Why might it be a good idea to invest in a master-planned community?
So, now that you have a clearer understanding of what a master-planned community is, we are now going to be talking you through why it might be a good idea for you to make an investment in!
For starters, as you will have clearly seen from the description that we provided you with above, master-planned communities are entirely unique and different from standard residential neighborhoods – and this alone helps set them apart from other living residential communities.
The MPC business model is entirely unique and comes with several attractive features that might be of interest to those looking to make a worthwhile investment that will reap long-term benefits. For this reason, they make a worthwhile investment for investors that are open to making an investment that will offer long-term benefits.
Wondering why? It’s key to remember that master-planned communities are essentially created in order to ensure a consistent circulation of profit, and while master-planned communities can vary from community to community, here’s a quick breakdown of what an MPC model looks like:
Initially, the master-planned community begins with an initial investment. This typically comes from the main MPC developer, who will acquire acres and acres of land (often upwards of 10,000 or more) that can be used to build on.
Once the main master-planned developer acquires the land needed to create a master-planned community, the developer will then typically proceed to sell small portions of land to homebuilders, who will then go on to create the neighborhoods.
After the land has been acquired and the residential community has been built, there will then usually be a commercial interest – and this will lead to multiple commercial developers wanting to acquire parts of the land in order to build a variety of amenities typically seen in MPC neighborhoods.
Once commercial development begins to take place, a snowball effect will take place – causing all of the surrounding land to increase in value significantly. More often than not, with this increase in value, the main MPC developer will then go on to sell more land to homebuilders, although at a much higher price due to the increase in value of the surrounding land thanks to the commercial development interest.
The cycle that we have talked you through above will then go on to repeat until all of the lands have been filled, and a successful master-planned community has been established. As we have already mentioned above, no two master-planned communities are ever the same, although it is worth noting that some of the larger and more established master-planned communities have a variety of large recreational and essential amenities, including sports arenas, schools, hospitals, malls, restaurants, tourist attractions and much, much more. It is important to keep in mind that it can take many decades for a large, bustling, and successful master-planned community to be built to this kind of scale.
How to invest in a master-planned community
If you’re interested in making an investment in a master-planned community, it can be a little difficult to figure out how to go about doing it. The simplest way that you can invest in a master-planned community is via (surprise surprise) the stock market, and there are quite a few publicly traded companies that you can go through in order to make an investment in a master-planned community of your choice.
At the time of writing this, some of the most popular and well-respected publicly traded companies that offer the public the opportunity to invest in an MPC are the D.R Horton and Brookfield Property Partners and are some of the most popular currently in the USA. However, it is worth noting that neither of these companies will provide you with the opportunity to invest in an MPC as a whole, as both companies are involved in primarily real estate.
If you would like to invest in an MPC as a whole, then we recommend opting for a company such as the Howard Hughes Corporation, which is a publicly-traded company that focuses solely on creating revenue and shareholder value via MPCs as a whole, and currently has several MPCs under its belt.
Bottom line
All in all? Master-planned communities are worthwhile investments to make, but that doesn’t necessarily mean that they’ll be the right investment opportunity for everyone.
If you are currently on the fence about whether or not to make an investment in an MPC, then it’s important to keep in mind that master-planned communities can often take decades upon decades to become established, which means that while you might not see any initial results – the long term profit that can be made from opting to invest can be very fruitful.
If you’re an investor looking for quick money, then it’s safe to say that an MPC is probably going to be the wrong type of investment to make.
Hi, my name is Matt Roberts, and I have been a financial analyst and advisor for the past 7 years.
While my job is based within the money industry, in my spare time I enjoy looking into potential new investment opportunities. From cryptocurrencies, to purchasing vintage cars, everything has the potential to gain you money if you are wise and make the correct investment decisions.
Through this site, I hope to educate others on investing in general, and hope to provide others with useful information that can benefit them and the opportunities they have. If you are not confident with finances, investing money can be a daunting step, however, it is a lot easier than many people are led to believe.
